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Acc 230 Week 6 Checkpoint

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Accounting

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Homework

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Acc 230 Week 6 Checkpoint
Week 6 Check point
Locate the 2003 Consolidated Statements of Cash Flows for 1-800
Contacts, Inc. Net
Income for this company is on a downward trend while cash provided by
operating activities
Is on an upward trend. Using any information you can obtain about this
company and
Industry, write a report explaining this abnormal trend between the net
income and the
Cash flow numbers and whether this should be a red flag to investors
and creditors.
During the first quarter of 2003 the company purchased assets and took
over liabilities of Lens Express and Lens 1st. The total purchased
consideration resulted in $6,904, with common stock value of $19,859
and operating liabilities of $4,099. Since this was purchased in 2003 the
company will see a downward trend in net income while there is an
increase in operating activities. This company just took over two other
companies and now needs to pay back what was invested. Since the
two companies was purchased in the first quarter of 2003 the interim

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period are not necessarily a result that could be expected for the full
fiscal year of 2003. In 2003 the option to purchase 1,207,482 shared
where not included in the computation of Diluted EPS because the effect
would be anti-dilutive and decreasing the loss per common share. As of
2003 the company had 700,000 shares of restricted common stock that
where held in escrow with no shares to be released for 12 months. Along
with this the company also too out a loan for $10 million to be paid back
within 5 years to pay for the assets that they invested in. The company
needs to keep an eye on the net income to ensure that it does increase
and does not stay lower than the operating activities. The company
should red flag the situation to ensure that they will see an increase and
if not find the changes that should be made.

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